UPDATE 2-Ethiopian foreign exchange shortage will last years- new premier

(Adds additional quotes)

By Aaron Maasho

ADDIS ABABA, April 16 (Reuters) - Ethiopia's new prime
minister said on Monday that a foreign exchange shortage will
last for years and more cooperation with the private sector is
essential to solve it, state television reported.

ADVERTISEMENT

Abiy Ahmed, who was sworn in on April 2, addressed the local
business community at a session of more than two hours in a
hotel in the Ethiopian capital. His paraphrased remarks were
later broadcast by state-owned Ethiopian Broadcasting
Corporation.

"The crisis with hard currency will not be solved today, nor
will it in the next 15 or 20 years. There is an urgent need for
more cooperation with the private sector to find a solution,"
Abiy was reported as saying, adding that remittances from
Ethiopia's diaspora communities had also fallen for political
reasons.

Ethiopia has recorded average annual economic growth of
about 10 percent for the past decade, the fastest in Africa. But
foreign investors and local businesses complain that the severe
hard currency shortages are stifling the private sector.

The International Monetary Fund said in January that
Ethiopia's foreign reserves at the end of the 2016/17 fiscal
year stood at $3.2 billion, less than what it spends on imports
in two months. The government does not regularly release foreign
reserves figures.

The IMF flagged inadequate reserves as a downside risk to
economic growth for 2017/18, which it forecast at 8.5 percent.

Despite high economic growth, the landlocked country of 100
million people is heavily dependent on imports. The IMF said
export revenues last year were largely unchanged despite volume
growth as global agricultural commodity prices remained low and
exports from manufacturing, following the start of an
industrialization push, are just beginning.

ADVERTISEMENT

Abiy's remarks on Monday were his first substantive public
comments on the economy since he was sworn in.

On visits to several areas of the country, he has been at
pains to stress unity among the many ethnic groups and has
promised to expand political and civil rights, though he said in
public addresses that Ethiopians must give him time to take
these steps.

The government appears to have ended a months-long shutdown
of internet outside the capital, but a state of emergency
introduced the day after Abiy's predecessor resigned in February
remains in place.

The 42-year-old former army officer also called for
Ethiopian businessmen to repatriate their hard currency.

"Are your hard currency reserves only kept inside the
country? Have you not stashed them in accounts in Dubai? " he
asked at the gathering.

"If you would transfer them back to Ethiopia from your
accounts in Dubai and China, it would be of immense benefit to a
country that is struggling with shortages at the moment."

ADVERTISEMENT

He said that anyone found to have illegally taken hard
currency out of the country would be held accountable, but he
did not give details.
(Writing by Maggie Fick
Editing by David Stamp and Richard Balmforth)